Superannuation Discussion + market volatility

[Denali]

Well I’ve got probably another 20-25 years worth of working life ahead of me! Early retirement plans aside…

@Denali - can you share where you got that infographic from. I’d read about the delays but in a dry boring legislative update and would love to send that one on to my HR guys.

It was in my weekly members email from TAPS

Theres a 30 day free trial,

 

[Milboo]

Thanks!

 

[CaptJCool]

Age pension figures for June 2021 have arrived

only a net 1,410 added in 3 months (about 36,000 qualify every 3 months)

the net difference over 4.5 years is particularly tiny
some adjustments made to eligibility plus age moved from 65 to 66 and now 66.5

 

[Quickstatus]

Someone please explain to me what happens if the accumulation fund exceeds the 1.6M cap at retirement age

 

[There'sOnlyOneJimmy]

Someone please explain to me what happens if the accumulation fund exceeds the 1.6M cap at retirement age

The $1.6M cap was indexed up to $1.7M at 1 July 2021.

If you have funds in excess of the cap, then the excess just stays in the accumulation account (with the cap amount moved to a pension account).

 

[Quickstatus]

the excess just stays in the accumulation account

Yes sorry I should have put that in
What can be done with money in an accumulation account after retirement?

And re pension account, does a mandatory % need to be withdrawn each year as a annuity?

 

[lovetravellingoz]

Yes sorry I should have put that in
What can be done with money in an accumulation account after retirement?

You can just spend (withdraw) it, or leave it there. If left there then the earnings are taxed at 15% (Though in reality it is normally less than that).

 

[Quickstatus]

If left there then the earnings are taxed at 15%

If taken out as a lump sum after retirement?

 

[There'sOnlyOneJimmy]

Yes sorry I should have put that in
What can be done with money in an accumulation account after retirement?

There are a few options:
* Withdraw it tax free & spend it
* Withdraw it tax free & give it away
* Withdraw it tax free & invest it personally (or in someone else’s name)
* Withdraw it tax free & contribute it to someone else’s super account
* Leave it in the accumulation account and invest it as you see fit
* A combination of the above


Edit: to add another option...

 

[lovetravellingoz]

If taken out as a lump sum after retirement?

You can withdraw any amount. ie Buy a car, leave the rest till later......or not


Leaving at least some funds in your normal account is a good idea if you are likely to ever earn any future super. ie You might start a part-time job etc,

 

[Pushka]

If taken out as a lump sum after retirement?

Or you have reached 65 and can still be working.

 

[lovetravellingoz]

Note that at present with your pension phase that you can set it to only withdraw 2% (this is due to Covid, normally would be 4%) over the year.

I am just doing this now. $1.7 million into pension phase. I have also set it to withdraw the 2% in an annual (single) payment just before he 12 months is up and that way it will all earn in a tax free shelter.

Meanwhile I will spend from the remaining funds left in the normal super account which is being taxed on earnings.

 

[Quickstatus]

have reached 65

The Govt expects people born after 1 July 1952 to work longer

 

[Quickstatus]

I have also set it to withdraw the 2 in an annual (single) payment just before he 12 months is up and that way it will all earn in a tax free shelter.

T F Shelter = pension phase account?
So standard strategy is to withdraw the minimum mandatory and spend that plus accumulation account first.

Any point in putting in the annual $25K concessional contribution each year if the expected accumulation account balance will be over $1.6M by retirement age? (with conservative assumptions)

 

[Pushka]

The Govt expects people born after 1 July 1952 to work longer

That date isn't correct. I was born later than that and can access a tax free lump sum and not be retired.

 

[Quickstatus]

That date isn't correct

Ah I think you are referring to preservation age? which is 60 but I was referring to age pension....

 

[There'sOnlyOneJimmy]

And re pension account, does a mandatory % need to be withdrawn each year as a annuity?

Sorry, I missed the second part of your question.
Refer to this link for a table of minimum drawdown amounts: Key superannuation rates and thresholds

Post automatically merged: Aug 13, 2021

T F Shelter = pension phase account?
So standard strategy is to withdraw the minimum mandatory and spend that plus accumulation account first.

Yes, to both.

 

[Quickstatus]

minimum drawdown amounts

Interesting -basically until into the (age) 80s drawdowns will be around the average CPI levels (+/-) and hopefully less than annual earnings.

 

[Pushka]

Ah I think you are referring to preservation age? which is 60 but I was referring to age pension....

I was referring to lump sum withdrawal as per the quote of yours I used.

 

[lovetravellingoz]

T F Shelter = pension phase account?

Yes earnings are not taxed.

So standard strategy is to withdraw the minimum mandatory and spend that plus accumulation account first.

Well that is my strategy. Makes sense to me to spend the money (earnings) that is being taxed before money that is not.